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The ACC has been negotiating with its exclusive TV partner, ESPN, since some time after expanding last summer, and now the results are in:
Sources: ESPN's new ACC deal comes out to 15 years for $3.6 billion. That comes out to a whopping $17M per school.
— John Ourand (@Ourand_SBJ) May 9, 2012
One word comes to mind: ouch. It's probably more like $16 million per school per year because the league office takes a full share to run its operations. The old deal, for reference, gave each school $12 million per year.
The ACC added two new schools in Pittsburgh and Syracuse. They add new states to the conference footprint and a rather large single media market in the case of Pitt. Syracuse in theory gives the conference a decent piece of the New York City market as well.
In addition, TV rights become more valuable over time. They appreciate just like any other asset, and with live sports increasingly being among the few kinds of programming that people actually watch live, they're appreciating quite quickly these days.
Plus, the Pac-12's monster deal for its tier 1 and tier 2 rights supposedly reset the bar for television rights deals. That league is getting $3 billion over 12 years, or $20.8 million per school per year.
So with all of that wind at the ACC's back in its television negotiations, plus granting ESPN the ability to sell a title sponsorship on the conference's crown jewel basketball tournament, the league got a whopping $4 million per school per year extra over its previous deal. This deal is for all of its TV rights, so the individual schools can't sell their tier 3 rights (as SEC and Big 12 members can) or pool them together for an in-house TV network (as the Big Ten and Pac-12 do).
The ACC only had so much leverage because it was already locked into a long term deal with ESPN. That is also true for the SEC with CBS and ESPN, but I expect the SEC to get a larger raise than the ACC did because it expanded into the populous and football-crazy state of Texas. The ACC added two terrific basketball programs with mediocre (at best) football programs.
So what does this mean for the future of the ACC? It's unclear. This deal will certainly do nothing to quash certain rumors that have been going around about some schools wanting to leave for greener (pun intended) pastures. I saw in a few places some opinions that the ACC could get up to $18 million per school per year, and that might have been close enough to satisfy everyone. Instead, the ACC is behind the soon-to-be fourth place Big 12 by $4 million per school per year and at least $5 million per school per year behind everyone else (once the new SEC deal is announced). All of the rest of the conferences also can widen the gap either by having individual members sell their tier 3 rights or thanks to conference TV network money.
It will be interesting to see if there are any changes in the ACC's revenue distribution model. One possible change would be the "eat what you kill" system where postseason revenue is split up proportionately based on who earned what payout. Such an unequal system would be a fairly clear signal that the conference's football powers aren't happy with being left behind the other football powers in the region monetarily. It would also be a risk, however, because the unequal distribution system was one of the key causes of discontent in the Big 12 prior to 2010.
In any event, the ACC is now at least 20% behind the other four major conferences in TV money even after negotiating this new deal. That has to be a disappointment for the league no matter how happy a face John Swofford is wearing today.